Over the last four months BNP Paribas has launched and closed three balance sheet synthetic collateralised debt obligations (CDOs), each transferring the risk of a separate credit portfolio. Lovells advised BNP Paribas as arranger and separately advised the trustee on each transaction.
These transactions (Global Liberté III, Global Liberté IV and Global Liberté V respectively) were structured in part in the form of funded synthetic securitisations and in part by the entry by BNP Paribas into credit default swaps with various counterparties as part of BNP Paribas’ portfolio optimisation activities relating to its worldwide credit book. The transactions closed in March, May and June 2006 and were entered into in respect of an aggregate credit portfolio (consisting of both loans and bonds) of US$27.6 billion. In connection with this credit portfolio, approximately US$2.876 billion was securitised through three issues of notes by Omega Capital Europe p.l.c., a special purpose vehicle incorporated in Ireland.
Lovells’ team was led by client partner David Hudd and senior assistant James Doyle assisted by Neil Kurzon, Emma Ozols and Jennifer O’Connell. Paris based partner Sharon Lewis assisted by Susan Hopkinson advised on French law aspects of the transactions and New York based partner Rob Ripin assisted by Adam Solowsky advised on New York law aspects. London based partner Andrew Carey advised the trustee on each of these transactions, assisted by Bing Guan.
David Hudd said:
“Over the last nine years we have developed a strong working relationship with BNP Paribas. We are very pleased to have acted on the Global Liberté CDOs which enabled BNP Paribas to manage its substantial credit book.”
Other collateralised debt obligations (CDOs) on which Lovells has advised BNP Paribas recently include:
the Fairway CDO transaction, a €265 million synthetic CDO managed by BNP Paribas Asset Management which closed in April. This was one of the few public CDOs in recent months to parcel equity risk and also allowed for full or partial principal protection on the various tranches of notes issued; and
the Palladium CDO transaction, a €425 million synthetic CDO securitising mezzanine risk on a portfolio of sovereigns and corporate entities which are actively managed by BlackRock Financial Management, Inc.
Lovells also advised BNP Paribas on the first two Global Liberté transactions, both of which were balance sheet CDO transactions and which closed in 2005.